(Note: The author of this fundamental analysis is a financial writer and portfolio manager.)

Apple Inc. (AAPL) shares have climbed by about 36% over the past three years, to roughly $172, easily outperforming the S&P 500 rise of about 26% during the same time. But Apple's stock may have already peaked in 2018, as analysts trim their earnings and revenue outlook, and sentiment turns negative. 

An Investopedia article on April 4 noted that the stock looked as though it were ready to fall by about 10% based on a technical analysis over the short term. But the glaring long-term red-flag is that Apple's shares are currently trading at the upper end of its historical earnings multiple at 13.3 times 2019 earnings estimates of $13 per share. (For more, see also: Apple Stock Faces 10% Short-Term Pullback.)

Peak PE Multiple

Over the past three years, Apple's stock has seen a peak earnings multiple between 14 to 15 times one-year forward earnings estimates. It was the case when the stock topped out around $130 per share in February 2015, at a one-year forward PE of 14.5, resulting in shares falling below $100 in 2016. In 2017 the PE ratio again topped out at approximately 14.5 on two occasions. In 2017 the stock was also able to continue rising because analysts' earnings estimates were climbing higher, but that is no longer the case in 2018. This means Apple stock is likely to suffer. 

AAPL Chart

AAPL data by YCharts

Analysts' Sentiment Turns

Analysts have been moving away from a positive outlook on shares of Apple since the start of 2018. According to data from Ycharts, the number of analysts rating the shares as "buy" has declined to 17 from 22 at the start of the year. Meanwhile, the number of analysts rating shares an "outperform" has also declined to 7 from 9. Of the 41 analysts covering the stock, only 59% rate the stock a "buy" or "outperform," which is down from 77% at the start of 2018. (For more, see also: Top Apple Shareholders for 2018.)

AAPL Buy Recommendations Chart

AAPL Buy Recommendations data by YCharts

Cutting Estimates

The reason why analysts are changing their outlook for Apple is that they are lowering their revenue and earnings estimates going forward. Since the start of 2018 analysts have cut revenue estimates, now forecasting 2019 revenue of $271 billion, down from $280 billion, a drop of about 3%. Also, since the middle of March, analysts have been trimming their earnings outlook for 2019, from around $13.15 to $13.00 per share, a decline of 1.2%. It means that Apple's stock will not have the benefit of rising earnings to help lift shares higher in 2018, should this trend of lowering estimates continue. 

AAPL Chart

AAPL data by YCharts

Unless analysts see a reason to begin upping their revenue and earnings forecasts in the quarters ahead, Apple stock may continue to struggle or may have even already peaked in 2018. 

Michael Kramer is the Founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdingsInformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance. 

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.